Aldi PESTEL Analysis

Political

High levels of conflict and political vulnerability across the globe currently threaten the sustainability of foreign firms who may be stigmatised based on their country of origin. The majority of Aldi stores are situated in Europe, as well as in the U.S.A, Australia and China, which at present are all relatively free from conflict, and thus threat to Aldi's operations from war is low (Aldi, 2017b).

After Britain voted to leave the EU, uncertainty remains in the future of European firms in the UK. While Aldi made a foreign direct investment into the UK, and thus should not be affected as much as a firm with a joint venture or import/export business model, the regulations and political relationships between the UK and Germany specifically as one of the most influential countries in the Eurozone is likely to present difficulties to Aldi's UK operations (Corking, 2016).

Economic

As an effect of Brexit, prices have risen in the U.K. and the pound has dropped. This has worked in Aldi's favour, with shoppers turn to discounters, resulting in Aldi growing at its fastest rate in over two years, as a result of price rises in other supermarkets since the vote for Brexit and the cost of imported goods being pushed up (Butler, 2017b).

Inflation in the grocery market rose to 2.9% in May, an increase from 2.6% the month before, meaning that shoppers have to spend £27 extra for the same goods over this period (Butler, 2017b). Given that Aldi is a discount supermarket, this is favourable as customers will be seeking to find cheaper products.

The overall growth for the grocery market as of May 2017 is 3.8% year on year, indicating that as the market expands, demand will rise. Nonetheless, sales in the grocery market had increased in total by just 0.2% as a consequence of food price inflation (Butler, 2017b).

The rise in inflation means that shoppers will likely be more aware of the need to balance their household budgets, and thus will be more likely to eat at home as opposed to in restaurants, meaning that supermarket sales in discounted retailers such as Aldi could rise even further (Butler, 2017b).

While the national living wage of the UK is set at just £7.20 an hour for workers over the age of 25, Aldi announced in 2017 that it will increase its lowest hourly wage in London to £9.75 an hour, beating the living wage and also meaning that higher disposable income is available (Fleming, 2017).

Socio-Cultural

Aldi is currently the highest paying supermarket in the UK after giving 3000 staff members a pay rise in a bid to overtake fellow German discounter Lidl in-terms of wages paid (Davies, 2017). Higher wages result in a better standard of living for those being paid them, and thus allow workers to afford better food, healthcare and exercise means, benefitting society (Card and Krueger, 2015).

By 2020, Aldi aims to teach 1.2 million children in the UK healthy eating habits through their Get Set to Eat Fresh Initiatives (Aldi, 2017a).

Technological

Supermarkets are increasingly turning to technology to aid their service propositions, with an increasing number of consumers expecting the efficient self-service checkouts from grocery providers (Orel and Kara, 2017). Aldi are yet to adopt such technology, and although notoriously quick and efficient in serving consumers, long ques may deter consumers who wish to only buy a few products and can't check out efficiently.

Environmental

Aldi increasingly stock their products from local British producers and farmers, helping to support local producers and ensure the sustainability of the local areas that they operate in (Daily Record, 2017).

Legal

In the past years, the supermarket industry of the U.K. has been frequently affected by scandals concerning the content of food products, with perhaps the most infamous of these scandals being the horsemeat scandal that affected primarily Tesco (Rawlinson, 2017). In 2016, Aldi also found itself in legal disputes as a result of misrepresenting its sales of herbs, with watchdogs finding olive leaves in oregano products (Farrell, 2016).

Farrell, P. (2016) 'Aldi and other oregano suppliers promise to turn over new leaf after ACCC investigation.' The Guardian. [Online] [Accessed on 21 July 2017] https://www.theguardian.com/australia-news/2016/nov/09/aldi-and-other-oregano-suppliers-promise-to-turn-over-new-leaf-after-accc-investigation

Topham, G. (2017) 'Asda considers bid for B&M that would give it access to local stores.' The Guardian. [Online] [Accessed on 23 July 2017] https://www.theguardian.com/business/2017/jul/23/asda-considers-bid-for-bm-that-would-give-it-access-to-local-stores